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Our briefing for Monday, August 9, 2021:
Aug 9, 2021 3:32:20 PM
- In the United States, daily coronavirus cases are averaging at over 100,000 per day, the highest in six months according to data from Johns Hopkins University. Hospitalizations and deaths are also on the rise. U.S. top infectious disease expert Dr. Anthony Fauci says the virus simply will not go away until enough people are vaccinated. He warned last week that more pain and suffering will be ahead. According to data from the U.S. Centers for Disease Control and Prevention (CDC), approximately 70.6% of adults have received at least one dose of vaccine, while 60.9% are considered fully vaccinated.
- In Canada, the border officially opened to fully vaccinated travellers from the U.S. As of midnight on Sunday, American travellers are allowed to enter Canada for non-essential purposes as long as they can prove that they’ve been fully vaccinated for at least 14 days. Visitors are only allowed if they reside in and are travelling from the U.S. and they are required to submit their travel documents and proof of vaccination through the ArriveCAN app or website beforehand. Canada will open the border to fully vaccinated travellers from the rest of world on Sept. 7.
- In the United Kingdom, Britain’s competition watchdog will look into the costs of Covid-19 testing for travellers. U.K. Health Secretary Sajid Javid will take advice from the Competition and Markets Authority on the market for PCR tests. The PCR tests are required for travel to some international destinations and for return from amber and green list countries. Javid said the high costs of the tests are preventing some families from travelling, and he asked the watchdog to look into inconsistent pricing. The tests can average about 75 pounds ($130 Cdn) each.
- France will continue to move forward with their health pass, despite the number of protests that have taken place across the country. The health pass is now required for access to cafes, restaurants and for long distance travel. The pass had already been in place for cultural and recreational venues. Thousands protested in Paris and other cities on Saturday, only days after the French Constitutional Council upheld most provisions of a new law that would expand the health pass requirements to other locations. About 237,000 people protested nationwide, according to French officials.
- South Korea’s health minister has apologized for a Covid-19 vaccine shortage, after announcing that a planned shipment of Moderna vaccines would arrive with less than half the expected doses. Health Minister Kwon Deok-cheol said Moderna informed South Korea that less than half of the expected 8.5 million doses would be arriving in August. According to the Korea Disease Control and Prevention Agency (KDCA), only about 2.4 million doses of Moderna have arrived so far, while South Korea has a contract with Moderna to buy 40 million doses.
- In Australia, Prime Minister Scott Morrison announced that Moderna will become the third approved Covid-19 vaccine. A total of about 10 million Moderna shots are scheduled to arrive in country by the end of the year, Morrison said. Morrison is still taking criticism for the lagging vaccine rollout, with only about 22% of Australians fully vaccinated. Morrison said any Australian over 16 who wants a vaccine will be offered one by the end of the year. New South Wales reported 283 new cases of Covid-19 in the past 24 hours, up from 262 cases a day earlier.
Covid-19 – Due Diligence And Asset Management
Hedge funds fall into the red as volatility and variants halt nine-month rise
Brief: Hedge funds’ nine-month consecutive run of positive returns has been halted, with managers ending last month in the red as market volatility and renewed uncertainty over the impact of coronavirus variants. Hedge Fund Research’s main industry-wide benchmark, the HFR Fund Weighted Composite Index – which tracks the monthly returns of some 1400 single manager hedge funds across all strategy types – lost 0.60 per cent in July, its first down month since September 2020. The dent means hedge funds have now returned 9.45 per cent gain since the start of 2021. Before last month, the industry’s January-to-June advance – a rise of some 10 per cent – had been its best first-half performance since 1999, according to HFR data.
UK DB funding levels improve since the onset of Covid-19, but sponsor health remains top concern, says LGIM
Brief: For the first quarter since the onset of the pandemic, the health of the UK’s Defined Benefit (DB) pensions schemes failed to improve, ending what had been four consecutive quarters of growth. However, it should be noted that funding levels remain far stronger than their pre-Covid levels, according to Legal & General Investment Management (LGIM). LGIM's Health Tracker, a monitor of the current health of UK DB pension schemes, found that the average1 DB scheme can expect to pay 98.2 per cent of accrued pension benefits as of 30 June 2021, the same figure recorded on 31 March 20212. The health of the UK’s Defined Benefit (DB) pension schemes had originally dropped as low as 91.4 per cent as of 31 March 2020, following the onset of the pandemic, having previously been at 96.5 per cent as of 31 December 20194. LGIM’s monitor has since shown a continuing improvement in each of the last four quarters, which has been brought to an end with the latest data.
S&P 500, Dow dip amid oil price declines as virus concerns rise
Brief: Stocks fell Monday, losing some steam after rising to all-time highs late last week. Commodity prices tumbled as concerns over the coronavirus's spread resurged, with crude oil prices moving sharply to the downside. The S&P 500 fell as shares of oil companies including Occidental Petroleum (OXY), Apache Corporation (APA) and Diamondback Energy (FANG) dropped. The Dow also dipped, weighed down by a decline in shares of Chevron (CVX). U.S. West Texas intermediate crude oil futures (CL=F) dropped more than 4% at session lows Monday morning to hover around $65 per barrel, extending a more than 7.5% weekly decline last week. Brent crude (BZ=F), the international standard, also dropped. Other commodities also dipped Monday morning, including with copper, silver and gold futures each moving lower by at least 1%. Treasury yields fell across the curve, and the benchmark 10-year yield retreated to below 1.28%.
Industry tentatively bullish on US as S&P 500 approaches fastest 100% recovery in history
Brief: The S&P 500 is poised for its fastest 100% recovery in history and investors remain bullish on the US equity market but advise caution on the sustainability of such a rapid recovery. From its 20 March 2020 low point to 6 August 2021, the S&P 500 has risen 95% in under 17 months, according to data from FE fundinfo, well ahead of the pace of the current record recovery following the Global Financial Crisis, which took two years. While nothing is guaranteed, Juliet Schooling Latter, research director at Chelsea Financial Services, believes it is "highly likely" the previous record will be broken given the strength of US earnings combined with current monetary policy. "The difference between this crisis and post-GFC is that we have had faster and bigger amounts of fiscal stimulus which are helping us to recover faster," she explained. "The earnings growth is also extremely strong. People have been calling [it] another tech bubble because they have been focusing on share price charts for tech companies.
Unemployment rate headed to a 50-year low: Goldman Sachs
Brief: Goldman Sachs sees the U.S. labor market maintaining its momentum well into 2022. Economists at the firm led by Jan Hatzius lowered their year-end 2021 unemployment rate forecast slightly to 4.1% on Monday. For 2022, Hatzius and his team projects a 3.5% unemployment rate. If achieved, the unemployment rate would be at a 50-year low as the economy powers back from the COVID-19 pandemic. Employment at those levels in 2022 would bring the economy to full employment, Hatzius says. "We expect further solid job gains in the rest of the year. One reason is that labor demand remains very strong. We also see further scope for fairly quick job gains from additional reopening, the expiration of federal unemployment benefits, and the return of in-person school," explains Hatzius.
